Bank of Tokyo-Mitsubishi to expand loans


The Bank of Tokyo-Mitsubishi hopes to extend new loans

staff and wire reports

TOKYO, Japan (CNN) -- The Bank of Tokyo-Mitsubishi (BTM) will increase lending from this month, aiming to extend 1 trillion yen (about $8.3 billion) in new loans over the next three years, according to a report in the Nihon Keizai Shimbun.

The bank, a member of the Mitsubishi Tokyo Financial Group, is seen as relatively strong compared to its peers among Japanese big banks.

Under its plan, the Mitsubishi Tokyo Financial Group will choose 30,000 companies, including 2000 new clients, and ask them to take out loans, a source told Reuters news agency.

BTM hopes to meet its one trillion yen target by the end of March 2005. By that time, it expects a rise of 100 billion yen ($830 million) in business profit.

The bank plans to raise interest rates, using a case-by-case credit risk for borrowers. It estimates a 0.3 percentage point rise in its lending margin as a result.

A reshuffle in the banking sector has seen other banks reduce overlapping lending. In providing loans to affected borrowers, the Bank of Tokyo-Mitsubishi aims to become the main bank for over 1000 companies.

The BTM move comes as Japanese banks are struggling with an estimated 41 trillion yen ($340 billion) in bad loans.

In a period of economic downturn, many banks have extended lending to smaller companies, hoping to secure future revenue despite the higher risk.